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Message
Emergency money account advice
Posted on 7/1/14 at 9:05 am
Posted on 7/1/14 at 9:05 am
Hey all, just wanted to get some thoughts on places to keep some emergency money. The wife and I usually keep $5,000 on hand for any emergency type house or car repairs (new roof, new AC unit, transmission, etc.) Since we live in an old house and I drive a 12 year old car these things come up with a slight regularity.
Typically when something up, like just recently when we had our roof replaced, we put it on our credit card to get the airline miles, and then pay it off completely when the bill comes in. So we don't need immediate access to the money, but we would need to be able to get it into our checking account within a few weeks.
We currently keep the money in a savings account with a .95% return rate. Ultimately I was wondering if there was a better place for that money, or if we should rethink our emergency fund strategy.
Any thoughts would be appreciated.
Typically when something up, like just recently when we had our roof replaced, we put it on our credit card to get the airline miles, and then pay it off completely when the bill comes in. So we don't need immediate access to the money, but we would need to be able to get it into our checking account within a few weeks.
We currently keep the money in a savings account with a .95% return rate. Ultimately I was wondering if there was a better place for that money, or if we should rethink our emergency fund strategy.
Any thoughts would be appreciated.
6
Posted on 7/1/14 at 9:11 am to RolltidePA
Thats about the best you can get with it being readily available.....i used to have an ing direct that made great return but i think its about the same percentage rate now.
Posted on 7/1/14 at 9:19 am to RolltidePA
quote:
$5,000
quote:
We currently keep the money in a savings account with a .95% return rate.
IMO if $5,000 is your average emergency fund balance I wouldn't worry much about the interest rate you're getting. It's more important that the money is there and readily accessible rather than serving as a pseudo investment. You're not going to be earning much interest on that amount anyway.
Posted on 7/1/14 at 9:34 am to Jwodie
quote:
IMO if $5,000 is your average emergency fund balance I wouldn't worry much about the interest rate you're getting. It's more important that the money is there and readily accessible rather than serving as a pseudo investment. You're not going to be earning much interest on that amount anyway.
That's more or less what I was thinking. I logged into that account today to transfer some money to pay for a some repairs, and it got me questioning if there was something better to do with the money that I hadn't thought about. Figured it couldn't hurt to ask and see what some others thought.
We do keep a separate F-You / job loss emergency fund, but that is managed differently.
Posted on 7/1/14 at 9:49 am to RolltidePA
Assuming that you have a fully funded Roth, just leave it be.
Posted on 7/1/14 at 2:00 pm to RolltidePA
We keep our emergency fund at my wife's credit union. It's not super hard to access the money, but it does take a bit of effort (i.e. go to the school board office where the CU is, when they are open, and they only do withdrawals in check form). So it prevents us from just grabbing money for any old reason.
You are probably not going to find something much better than 1 percent without taking some sort of risk with the money.
You are probably not going to find something much better than 1 percent without taking some sort of risk with the money.
Posted on 7/1/14 at 2:09 pm to Joshjrn
quote:
Assuming that you have a fully funded Roth, just leave it be.
Agreed - if your ROTH is not fully funded, that can be used as an emergency fund as the OP describes - usually doesn't take more than a few days for the money to clear - and even a fairly conservative Vanguard mutual fund will have minimal fees - if purchased directly - and yield 5 to 6 times what the savings account does.
Posted on 7/2/14 at 9:51 am to RolltidePA
I have all my emergency money in Vanguard's Wellelsey Income fund (VWINX). It's 40/60 stock/bonds. The risk is very low for the kind of returns it has generated over the years. For those of us with 5-6 figure emergency funds, this is a great option, much better than money market funds and savings accounts.
It's only had 4 losing years since 1980: 1.9% in 1987, 4.4% in 1994, 4.1% in 1999, and 10.3% in 2008. And it has generated over 10% in total returns since its inception in 1970.
If you want a good spot for emergency money, check it out.
It's only had 4 losing years since 1980: 1.9% in 1987, 4.4% in 1994, 4.1% in 1999, and 10.3% in 2008. And it has generated over 10% in total returns since its inception in 1970.
If you want a good spot for emergency money, check it out.
This post was edited on 7/2/14 at 12:00 pm
Posted on 7/2/14 at 10:01 am to Sigma
quote:
I have all my emergency money in Vanguard's Wellelsey Income fund
Same here. I like the nearly 3% quarterly dividend.
I was using an Ally savings account to score their competitive .87% rate (
) but decided to fully fund the Roth instead. Posted on 7/2/14 at 11:22 am to Sigma
quote:
For those of us with 5-6 figure emergency funds
Way to go buddy, you did it!
Posted on 7/2/14 at 11:44 am to Sigma
quote:
It's only had 4 losing years since 1980: 1.9% in 1987, 4.4% in 1994, 4.1% in 1999, and 10.3% in 1998.
Did it not lose ~17% in 2008?
Posted on 7/2/14 at 11:44 am to Douboy
quote:
Way to go buddy, you did it!
I just figure most people with stable jobs that post in this forum have 10K or so minimum as an EF. And I know we've got quite a few here, especially the older folks, who have said they've got well in excess of that as part of a conservative AA.Posted on 7/2/14 at 11:48 am to kennypowers816
quote:
Did it not lose ~17% in 2008?
Sorry, my 1998 was meant to be 2008. As best I can tell, it was -15% in NAV, but including distributions, the loss was about -10%.
Posted on 7/2/14 at 11:56 am to Sigma
Google finance just said it was ~17%ish. But I see your point with the distributions. Makes sense.
Not a bad idea. I may move some emergency cash into this eventually.
Not a bad idea. I may move some emergency cash into this eventually.
Posted on 7/2/14 at 12:24 pm to Oenophile Brah
quote:
I was using an Ally savings account to score their competitive .87% rate ( ) but decided to fully fund the Roth instead.
I have one of these for savings under one year. Squeezing whatever I can get out of the money.
Posted on 7/3/14 at 5:24 pm to Sigma
quote:
I just figure most people with stable jobs that post in this forum have 10K or so minimum as an EF.
Sorry bud, wasn't trying to be a jerk. I just thought it was funny. You seem to be headed in the right direction and that is something to be proud of. I hope to learn something from you on here.
Posted on 7/4/14 at 11:38 am to Sigma
quote:
I have all my emergency money in Vanguard's Wellelsey Income fund (VWINX). It's 40/60 stock/bonds.
Through a ROTH IRA or a regular investment account?
Posted on 7/4/14 at 3:11 pm to tigersnipen
quote:
Through a ROTH IRA or a regular investment account?
Regular taxable. Roths are in target date funds.
Posted on 7/4/14 at 7:00 pm to RolltidePA
HELOC. Zero balance now, but since it is set up already the money will be available in my checking account at the click of a button.
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